Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/213075
Authors: 
Lieberknecht, Philipp
Year of Publication: 
2019
Series/Report no.: 
Bundesbank Discussion Paper 47/2019
Abstract: 
This paper proposes a tractable financial accelerator New Keynesian DSGE modelthat allows for closed-form solutions. In the presence of financial frictions, theNew Keynesian Phillips curve features a flat slope with respect to the output gapand is strongly forward-looking. All shocks cause endogenous cost-push effects inthe Phillips curve, leading to larger inflation responses and a breakdown of divinecoincidence. The central bank's contemporaneous trade-off between output gap andinflation stabilization is aggravated. Optimal monetary policy is strongly forward-looking and geared towards inflation stabilization.
Subjects: 
financial frictions
financial accelerator
Phillips curve
optimal monetary policy
JEL: 
E42
E44
E52
E58
ISBN: 
978-3-95729-655-9
Document Type: 
Working Paper

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